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How to Pay Bills When You’re Short on Cash

April 30, 2012 by  
Filed under Mortgage

Everyone knows that paying your bills on time can preserve your credit score. Paying bills can be tough if your pay day money doesn’t reach far enough. That’s when you have to come up with some guidelines for the proper way to pay your bills so that you don’t affect your credit score as much and you give yourself more time to get back on track. Follow these simple rule of thumb and when you suddenly find yourself getting off track, at least you won’t get dinged as badly on your credit report.

Mortgage and Rent First

Your mortgage or your rent should be paid first, for obvious reasons. Mortgage holders are very quick to start foreclosure proceedings these days and a late mortgage payment is considered a much more serious default than a late utility bill. If you rent, a late payment can put you in jeopardy of being evicted fairly quickly. Since it’s not that easy to get a place to stay once you’ve had an eviction or a foreclosure on your credit record, this bill should be paid first to keep a roof over your head.

Food, Transportation, and Utilities

These should come second. You can be late somewhat on the water and electricity bills before service is cut off, but you can’t be late on a car payment without the possibility of having your car repossessed. If you have no other way to get to work, then pay the car payment first and then the utilities and food. Otherwise, you may end up losing your job if you can’t make it to work.

Unsecured Debt

Pay off your credit card bills any unsecured debt last. This type of debt takes longer to default and there are opportunities along the way to settle the debt for a fraction of the cost, should you find your situation not improving as much as you had hoped.

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